Interim Results

Hill & Smith Hldgs PLC 11 September 2002 Hill & Smith Holdings PLC Interim results for the six months ended 30 June 2002 The Board of Hill & Smith Holdings PLC is pleased to announce a further improvement in the Group's financial performance during the period ended 30 June 2002: Highlights • Profit before exceptional items and goodwill amortisation up 11.5% • Adjusted earnings per share up 14.9% • Interim dividend 2.1p (2001: 2.1p) • Net operating cash flow £9.0m • Further reduction in net debt • Completion of two acquisitions after the period end Chairman David Winterbottom said: 'We continued to pursue our strategy of focusing on construction, building and transport infrastructure products, where we see many opportunities for growth. The Building and Construction Products division made further progress and is making an ever-increasing contribution to the Group's overall trading profits. Our capital investment and product development programmes continue to provide improving returns against a background of steady levels of demand and increasing infrastructure spend in the public sector, particularly in transport. Subject to there being no adverse changes in market conditions, we look forward to a satisfactory outcome for the full year.' Further information: Hill & Smith Holdings PLC David Grove (Chief Executive): 0121 704 7430 (mobile 07973 325667) Quantum PR plc Edward Carter: 0121 633 7775 (mobile 07770 378097) Sarah Cliff: 0121 633 7775 Chairman's Statement Results I am pleased to be able to report a further improvement in the Group's financial performance during the six month period ended 30 June 2002. Although turnover at £99.9m was down nearly 7% on the comparable period last year, operating margins improved, despite the impact of last year's property transactions. With the continued reduction in debt, net interest expense fell by £0.5m. As a result, profit before exceptional items and goodwill amortisation amounted to £5.0m, which was 11.5% ahead of last year's comparative figure of £4.5m. Adjusted earnings per share were 5.72p, which represents a 14.9% improvement on last year's comparative figure. Operations We continued to pursue our strategy of focusing on construction, building and transport infrastructure products, where we see many opportunities for growth. The Building and Construction Products division made further progress and is making an ever increasing contribution to the Group's overall trading profits. Our capital investment and product development programmes continue to provide improving returns against a background of steady levels of demand and increasing infrastructure spend in the public sector, particularly in transport. Improved performances were achieved by the majority of our activities in this division, particularly our transport infrastructure related businesses. Margin pressures and supply problems adversely affected profits at Express Reinforcements Limited but there are signs that these matters are being overcome. The Industrial Products division, which accounted for only 16% of the Group's operating profits in the period, experienced a background of generally difficult trading conditions. In spite of this challenging environment, the Board continues to manage these businesses actively in order to enhance shareholder value. Acquisitions Subsequent to the period end two significant acquisitions have been completed which further extend the Group's activities in relation to its infrastructure products portfolio. In July we paid £1.4m for the business and certain assets of Brifen, the market leader for the supply of wire rope safety barrier systems for the UK road network, complementing the Group's safety barrier business. Brifen also supplies export markets, including the USA. In August we completed the £5.0m acquisition of Mallatite Limited, one of the market leaders in the UK for the manufacture and supply of lampposts. We are very optimistic about the future prospects of both businesses. Cash Flow and Gearing Cash flow from operating activities before exceptional items totalled £9.0m and this helped to reduce Group net debt to £48.1m at the period end from £52.1m at 31 December 2001. As a result, gearing fell from 152% to 133%. Immediately following the acquisition of Ash & Lacy Plc in November 2000, the total Group net debt was £78m. Just over eighteen months later it has been reduced by nearly £30m. Dividends I am pleased to report that an interim dividend of 2.1p per share has been declared by the Board for the six month period ended 30 June 2002 (2001: 2.1p). Based on the adjusted earnings per share this dividend is covered 2.7 times. Outlook At the start of the second half of the current financial year, trading levels and order books continue to be in line with our expectations. Subject to there being no adverse changes in market conditions, we look forward to a satisfactory outcome for the full year. David Winterbottom Chairman 11 September 2002 Group Profit and Loss Account Notes 6 months ended 6 months ended 15 months ended 30 June 2002 30 June 2001 31 December 2001 Before Exceptional Before Before exceptional items and exceptional exceptional items and goodwill items and items and goodwill amortisation Total goodwill Total goodwill Total amortisation amortisation amortisation £'000 £'000 £'000 £'000 £'000 £'000 £'000 Turnover 1 99,856 - 99,856 107,166 107,166 241,849 241,849 ------- ------- ------- ------- ------- ------- ------- Operating 1 6,981 (779) 6,202 6,980 4,346 15,696 7,523 Profit Profit on - - - - - - (1,106) sale of business Profit on - 218 218 - 2,121 - 1,179 sale of fixed assets ------- ------- ------- ------- ------- ------- ------- Profit on ordinary activities 6,981 (561) 6,420 6,980 6,467 15,696 7,596 before interest Net interest (1,970) - (1,970) (2,485) (2,485) (5,611) (5,611) payable ------- ------- ------- ------- ------- ------- ------- Profit before 5,011 (561) 4,450 4,495 3,982 10,085 1,985 taxation Tax on profit 2 (1,523) - (1,523) (1,451) (1,150) (2,933) (936) ------- ------- ------- ------- ------- ------- ------- Profit after 3,488 (561) 2,927 3,044 2,832 7,152 1,049 taxation Minority 1 - 1 (7) (7) (11) (11) interest ------- ------- ------- ------- ------- ------- ------- Profit for 3,489 (561) 2,928 3,037 2,825 7,141 1,038 the period ------- ------- ------- ------- Dividends 3 (1,282) (1,280) (3,792) ------- ------- ------- Retained profit/(loss) for the 1,646 1,545 (2,754) period ------- ------- ------- Earnings per 4 5.72p (0.92p) 4.80p 4.98p 4.63p 12.01p 1.75p share Diluted 4 5.70p (0.92p) 4.78p 4.97p 4.62p 11.98p 1.74p earnings per share Group Balance Sheet 30 June 2002 30 June 2001 31 December 2001 £'000 £'000 £'000 Fixed Assets Intangible assets 27,651 29,056 28,248 Tangible assets 44,093 44,997 44,399 Investments 125 515 225 ------- ------- ------- 71,869 74,568 72,872 Current Assets Stocks 17,700 19,412 16,785 Debtors 54,784 58,175 54,523 Cash and deposits 7,776 1,813 4,664 ------- ------- ------- 80,260 79,400 75,972 Creditors: amounts falling due within one year Borrowings and finance leases (18,872) (14,931) (15,744) Other creditors (52,419) (51,763) (49,990) ------- ------- ------- (71,291) (66,694) (65,734) Net current assets 8,969 12,706 10,238 Total assets less current liabilities 80,838 87,274 83,110 Creditors: amounts falling due after one year Borrowings and finance leases (36,976) (45,277) (41,056) Provisions for liabilities and charges (7,771) (6,960) (7,660) ------- ------- ------- Net assets 36,091 35,037 34,394 ------- ------- ------- Share capital and reserves Called up share capital 15,265 15,243 15,245 Share premium 3,370 3,336 3,338 Capital redemption reserve 238 238 238 Revaluation reserve 733 1,781 733 Other reserves 4,088 4,088 4,088 Profit and loss account 12,352 10,310 10,706 ------- ------- ------- Equity shareholders' funds 36,046 34,996 34,348 Equity minority interests 45 41 46 ------- ------- ------- 36,091 35,037 34,394 ------- ------- ------- Group Cash Flow Statement Notes 6 months ended 6 months ended 15 months ended 31 December 30 June 2002 30 June 2001 2001 £'000 £'000 £'000 Net cash inflow from operating 5i 8,996 10,711 25,189 activities Returns on investments and servicing (1,287) (2,148) (5,005) of finance Taxation 347 (737) (1,469) Capital expenditure and financial 5ii (2,762) 7,621 6,517 investment Acquisitions and disposals - - (72,355) Equity dividends paid (1,281) (1,280) (3,370) ------- ------- ------- Cash flow before financing 4,013 14,167 (50,493) Financing: Issue of new shares 51 - 5,874 Increase/(decrease) in borrowings (952) (15,192) 51,742 ------- ------- ------- (901) (15,192) 57,616 ------- ------- ------- Increase/(decrease) in cash in the 3,112 (1,025) 7,123 period ------- ------- ------- Reconciliation of net cash flow to movement in net debt Increase/(decrease) in cash 3,112 (1,025) 7,123 Cash (inflow)/outflow from borrowings 952 15,192 (51,742) ------- ------ ------- Change in net debt resulting from cash 4,064 14,167 (44,619) flows New finance leases - (743) (1,169) Loan notes issued as part of - - (1,759) acquisition ------- ------- ------- Movement in net debt in the period 4,064 13,424 (47,547) ------- ------- ------- Net debt at the start of the period (52,136) (71,819) (4,589) ------- ------- ------- Net debt at the end of the period (48,072) (58,395) (52,136) ------- ------- ------- Statement of Group Total Recognised Gains and Losses 6 months ended 6 months ended 15 months ended 30 June 2002 30 June 2001 31 December 2001 £'000 £'000 £'000 Profit for the period 2,928 2,825 1,038 Unrealised deficit on revaluation of - - (146) properties ------- ------- ------- Total recognised gains and losses 2,928 2,825 892 relating to the period ------- ------- ------- Reconciliation of movement in Group Shareholders' Funds 6 months ended 6 months ended 15 months ended 30 June 2002 30 June 2001 31 December 2001 £'000 £'000 £'000 Profit for the period 2,928 2,825 1,038 Dividends (1,282) (1,280) (3,792) ------- ------- ------- 1,646 1,545 (2,754) Goodwill previously written off to - - 387 reserves Other recognised net gains and losses - - (146) relating to the period New ordinary share capital issued 52 - 12,882 ------- ------- ------- Net increase in shareholders' funds 1,698 1,545 10,369 Opening shareholders' funds 34,348 33,451 23,979 ------- ------- ------- Shareholders' funds at the end of the 36,046 34,996 34,348 period ------- ------- ------- Notes to the Financial Statements 1. Segmental Information 6 months ended 30 June 2002 6 months ended 30 June 2001 15 months ended 31 December 2001 Turnover Operating Net Turnover Operating Net Turnover Operating Net Profit* Assets Profit* Assets Profit* Assets £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Building and construction products 78,162 5,832 45,732 82,097 5,197 50,074 185,872 12,336 44,264 Industrial 21,694 1,149 17,406 25,069 1,783 20,756 55,977 3,360 18,930 products ------- ------- ------- ------- ------- ------- ------- ------- ------- Total 99,856 6,981 63,138 107,166 6,980 70,830 241,849 15,696 63,194 operations ------- ------- ------- ------- ------- ------- Tax and (7,874) (6,700) (6,003) dividends Long-term debtors and other provisions 1,248 246 1,091 Net (48,072) (58,395) (52,136) borrowings Goodwill 27,651 29,056 28,248 ------- ------- ------- Total Group 36,091 35,037 34,394 ------- ------- ------- * Operating profit is stated before exceptional items and goodwill amortisation. 2. Taxation Tax has been provided on the profit before exceptional items and goodwill amortisation at the estimated effective rate for the full year. 3. Dividends The Directors have declared an interim dividend for the current year of 2.1p per share (six months to 30 June 2001: 2.1p) which will be paid on 8 January 2003 to shareholders on the register on 6 December 2002. 4. Earnings per share The weighted average number of shares in issue during the period was 61,005,960, diluted for the effect of outstanding share options 61,261,813 (six months ended 30 June 2001: 60,969,418 and 61,113,385 diluted). Earnings per share have been calculated on profits of £2,928,000 (six months ended 30 June 2001: earnings of £2,825,000) and earnings per share before exceptional items and goodwill amortisation on earnings of £3,489,000 (six months ended 30 June 2001: earnings of £3,037,000). Earnings per share before exceptional items and goodwill amortisation have been shown because the Directors consider that this gives a more meaningful indication of the underlying performance of the Group. 5. Notes to the Cash Flow Statement i. Reconciliation of operating profit to net cash flow from operating activities 6 months to 30 June 2002 6 months to 15 months to 30 June 2001 31 December 2001 Before Exceptional Total Before Total Before Total exceptional items and exceptional exceptional items and goodwill items and items and goodwill amortisation goodwill goodwill amortisation amortisation amortisation £'000 £'000 £'000 £'000 £'000 £'000 £'000 Operating 6,981 (779) 6,202 6,980 4,346 15,696 7,523 profit Income on (130) - (130) (235) (235) (805) (805) investment properties Depreciation 3,010 - 3,010 3,240 3,240 7,225 7,225 Amortisation - 779 779 - 732 - 1,786 of goodwill (Profit)/loss - - - - - (147) (81) of sale of fixed assets Change in working capital: Stocks (915) - (915) 1,544 1,544 3,948 3,998 Debtors (754) - (754) 4,823 4,823 6,101 7,408 Creditors and 804 - 804 (3,748) (3,739) (1,774) (1,865) provisions ------- ------- ------- ------- ------- ------- ------- (865) - (865) 2,619 2,628 8,275 9,541 ------- ------- ------- ------- ------- ------- ------- Net cash inflow from operating activities 8,996 - 8,996 12,604 10,711 30,244 25,189 ------- ------- ------- ------- ------- ------- ------- ii. Capital expenditure Purchase of tangible fixed assets (3,917) (5,228) (9,063) Sale of fixed assets 1,155 12,849 15,580 ------- ------- ------- (2,762) 7,621 6,517 ------- ------- ------- 6. Financial Information The results for the half years ended 30 June 2002 and 2001 are unaudited and do not constitute statutory accounts within the meaning of s240 of the Companies Act 1985. The financial information for the 15 months ended 31 December 2001 has been extracted from the statutory accounts for that year which have been filed with the Registrar of Companies and on which the auditors have given an unqualified opinion. Copies of the interim report will be sent to shareholders and will be available from Hill & Smith Holdings PLC office at: 2 Highlands Court Cranmore Avenue Shirley Solihull B90 4LE This information is provided by RNS The company news service from the London Stock Exchange

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